Luxembourg Treaty Company Formation

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Luxembourg Treaty Company Formation and Requirements

Luxembourg is one of Europe's premier holding and investment fund jurisdictions, with an extensive treaty network covering over 80 countries. Luxembourg holding companies benefit from the participation exemption on qualifying dividends and capital gains, the EU Parent Subsidiary Directive, and access to the full EU treaty framework.

The most commonly used structures for treaty companies are the Societe Anonyme (SA, a public limited company) and the Societe a responsabilite limitee (Sarl, a private limited company). Luxembourg's legal framework, EU membership, and political stability make it the jurisdiction of choice for structured finance, private equity, and international group holdings.

Participation Exemption

Dividends and capital gains from qualifying participations (at least 10% ownership or EUR 1.2 million acquisition cost, held for at least 12 months) are fully exempt from Luxembourg corporate and municipal business tax.

Minimum Capital

The SA requires minimum share capital of EUR 30,000 fully paid up. The Sarl requires a minimum of EUR 12,000. Both allow multiple share classes to facilitate flexible ownership and profit distribution structures.

Substance and Governance

Genuine substance is required for treaty access, including Luxembourg resident directors, board meetings held in Luxembourg, and decision making exercised within the jurisdiction.

Tax Rate

The combined corporate income tax and solidarity surcharge rate is approximately 17% to 18%, with no withholding tax on outbound dividends to qualifying treaty partners under many arrangements.

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Contact Neptune Fiduciaries Group via info@neptunecorporate.com or visit our Contact Us page.

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